It is also the first time the Queen has been seen at her birthday celebrations with her heir and heirs apparent.
More than 1,000 soldiers took part in the traditional display of of army drill, music and horsemanship.
Prince George waved as the Red Arrows took part in a flypast that was largely reduced because of poor weather.
BBC royal correspondent Nicholas Witchell said there was no doubt Prince George's first appearance on the balcony was the "headline image" of the day.
"He seemed really quite interested. He was pointing and waving. You wonder whether this isn't the moment when he starts to figure out that there's something a little bit unusual about his family," our correspondent added.
The Queen and Duke of Edinburgh earlier travelled by carriage from Buckingham Palace to Horse Guards Parade for the event.
The Duchess of Cambridge, meanwhile, made her first public appearance since she left hospital following the birth of Princess Charlotte last month.
There was no sign of Princess Charlotte but other guests at the event included Prime Minister David Cameron and his wife Samantha.
It is the 63rd time the Queen has attended a birthday parade, a record unmatched by any monarch.
Joined by other senior royals, the monarch inspected 1,100 soldiers of the Household Division at Horse Guards Parade.
Trooping the Colour
Trooping the Colour has its origins in traditional preparations for battle.
Colours, or flags, were carried, or "trooped", down the rank so that they could be seen and recognised by the soldiers.
In the 18th Century, guards from the royal palaces assembled daily on Horse Guards to "troop the colours", and in 1748 it was announced that the parade would also mark the sovereign's official birthday.
The Queen's actual birthday was on 21 April, when she turned 89. The Duke of Edinburgh celebrated his 94th birthday on Wednesday.
Earlier, the Prince of Wales, who is Colonel of the Welsh Guards; the Princess Royal, Colonel of the Blues and Royals; and the Duke of Cambridge, Colonel of the Irish Guards, rode on horseback in the procession to Horse Guards.
Catherine, the Duchess of Cornwall and Prince Harry, meanwhile, travelled together to the ceremony in a horse-drawn carriage.
The Duke of York rode in a carriage with his daughters Princesses Beatrice and Eugenie, and the Duke of Kent and the Duke and Duchess of Gloucester were in the final coach.
The Earl and Countess of Wessex are away representing the Queen at thewedding of Prince Carl Philip of Sweden to former glamour model Sofia Hellqvist.
Centenary year
The procession was accompanied by a Sovereign's Escort of the Household Cavalry, made up of Life Guards and Blues and Royals, in their silver and gold breastplates and plumed helmets.
The Colour paraded on Horse Guards this year was the flag of the 1st Battalion Welsh Guards.
The Prince of Wales Company, 1st Battalion Welsh Guards, trooped the Queen's Colour presented to them by the monarch at Windsor Castle in April.
The battalion last Trooped the Colour in 2013, but they are doing so again to mark their centenary year.
Since the last Queen's Birthday Parade, elements of the battalion have been on training exercises at home and abroad in places including the Falklands, Canada, Kenya, Kazakhstan and Belize.
Four of the five Foot Guards regiments of the Household Division - the Welsh Guards, Grenadier Guards, Scots Guards and the Coldstream Guards - are marching in the parade wearing bearskin hats and red tunics.
The Household Division Bands and Corps of Drums also took part, as are the King's Troop Royal Horse Artillery who, following the parade, will fire a 41-gun salute in Green Park to mark the Queen's official birthday.
